January employment data for Odessa and other Texas metro areas was not released until March, and that data release was a part of the Texas Workforce Commission’s annual data updating process in which monthly estimates are revised for prior periods and new benchmarks are set for monthly estimates moving forward in 2017.
As expected, Odessa payroll employment estimates were revised sharply downward with the release of the updated data. On average, about 3,525 jobs were lopped off the original estimates per the revised numbers, a downward revision of about 5%. The worst of those months was July 2016, in which the original estimate was revised downward by 4,400 jobs. At year-end (December) 2016, monthly total employment was down by 3.2% compared to December 2015; pre-revision data indicated employment was down by less than a percent and was about to close the gap. Average Odessa employment was down by 7.2% in 2016 compared to 2015 – the original estimates suggested a 3.2% decline on average in 2016.
The Odessa Economic Index was predictably affected. Monthly index values in 2016 were lowered by 3.8 points on average; the December 2016 OEI was lowered by 5.5 points, and was down compared to the revised December 2015 index by 11% (the OEI per the original employment estimates was down by 8.9% in December).
The revised seasonally adjusted employment numbers indicate total job loss over the course of the contraction of some 12,200 jobs, from a peak of 81,100 in December 2014 to a trough of 68,900 in November 2016. The good news is that employment loss appears to be complete at this point, with modest numbers of jobs added in both December 2016 and January 2017.
Under the new employment data and index benchmarks, the Odessa Economic Index has also posted minor gains for three straight months after reaching its cyclical nadir in October 2016 at 188.5. The January 2017 OEI improved to 189.1, up from 189.0 in December (and 188.9 in November), but still down 9.1% from the January 2016 OEI of 208.1.
Oil & gas employment numbers are a bit more difficult to pinpoint simply because carving out oil & gas exploration and production employment from the broader categories in which they are contained is something of an imperfect science; however, it appears Odessa oil & gas employment reached its low point in June 2016 and has begun to add a few jobs back, though only a handful over the last six months or so. The Texas Permian Basin Petroleum Index troughed in September 2016 at 208.9 and has posted solid increases in the ensuing four months. The January 2017 TPBPI increased to 223.3 for the month up from 218.2 in December, but down 3.9% from the January 2016 index of 232.4.
The regional rig count continued to improve through January and February (but has stalled in the last week or two), and the number of drilling permits issued across the region was nearly double the total from January 2016.
Crude oil prices have retreated from the bump that occurred on the heels of the cuts announced by OPEC and other parties to that agreement in late-November 2016.
The general spending picture in Odessa is improving, though real (inflation-adjusted) spending per January sales tax receipts is still down by about 4% year-over-year. That gap continues to narrow, and the February and March numbers – March in particular – continue to register recovery. Auto sales were sharply higher in January, up by about 32% compared to last year; however, the January 2016 total was down by about 46% compared to January of the previous year.
The revised employment data suggests total payroll employment in the Odessa metro area remains about 3% below January of a year ago; however, that year-over-year margin of decline continues to narrow, and will very likely go positive in the coming months.
Construction and housing were sharply higher compared to year-ago levels, albeit from very low points, especially in terms of building permit valuations and new single-family residence permits. The January monthly average housing price was down by close to 7% compared to January of a year ago; however, the January 2016 monthly average was a whopping 20% higher compared to January of the prior year.
The realistic expectation is that 2017 should be a year of at least modest economic recovery in Odessa, and the continued improvement will be registered by the upward trends in the Odessa Economic Index. The oil & gas outlook remains somewhat tenuous, however, particularly in terms of crude oil pricing, which in turn will drive other measures of activity across the region. The strength and pace of continued recovery and growth in the regional oil & gas economy will in large part determine the course of general economic growth in the Odessa metro area and the basic market fundamentals presently point to crude oil prices that are not greatly higher than they are right now or have been in recent months.